5 ms·

Points will work fine. The reason money works is partly the SKITG effect, but not entirely. In an iterated prediction market game, eventually reputation will ac

by darawk 6y ago

Points will work fine. The reason money works is partly the SKITG effect, but not entirely. In an iterated prediction market game, eventually reputation will accrue to those that make accurate forecasts. Much in the same way that money accrues to those skilled in business, or at forecasting in traditional financial markets. This iterated equilibrium should result in high quality predictions after a relatively short period of calibration.

bananaface 6y ago
I'm not convinced. If there's no direct profit, I can't imagine talented people are going to waste that much time on it. Reputation is also not that great of a proxy, since you can game it. E.g. by using strategies that push all the risk into the tails. If it's money, you have a much stronger incentive to cover your ass against rare but disastrous blowups, since your entire livelihood is at stake (rather than just your ability to play the local game). If you're just trying to look good on Facebook... The risk/reward is different.
- darawk 6y ago
  > I'm not convinced. If there's no direct profit, I can't imagine talented people are going to waste that much time on it. Wikipedia, reddit, HN, and stackoverflow would beg to differ. Reputation drives people to expend incredible amounts of effort. In 2002 I would have had the same intuition you do. But i've seen reputation systems and social credit build too many incredible things to feel that way anymore. > Reputation is also not that great of a proxy, it encourages strategies which push the risks into the tails. If it's money, you have a much stronger incentive to reduce your own tail risk since your entire livelihood is at stake, rather than just your ability to play the local game. I do think there's a reasonable argument that the risk curves will be different, but I don't really see how that cashes out in an inaccurate overall system. It seems to me that as long as reputation gets allocated to those who are consistently correct, the system should work pretty well.
  - bananaface 6y ago
    There is no StackOverflow for trading, or betting. Nobody gives away their edge for free, although they may give away their trades. >I don't really see how that cashes out in an inaccurate overall system Imagine a strategy that has a 50% chance of blowing you up completely over 10 years, but nets you 50% more profit if it works. The average return of this strategy is 25% less than a safe strategy (zero risk, zero gain), but it has a 50% chance of winning in this marketplace. If it were real money, nobody would go near it. Ok, now imagine there's 100 people running strategies with that profile and 100 running the safe strategy. All of the top spots will be held by the suicidal strategy. This is an artificial example but you get the point. Real money forces you to avoid that risk profile as soon as you identify it.
    - crazygringo 6y ago
      This is exactly it. I'm surprised I had to scroll down this far to find the actual explanation.
    - darawk 6y ago
      > There is no StackOverflow for trading, or betting. Nobody gives away their edge for free, although they may give away their trades. This isn't trading, though. It's forecasting. You could make that argument about the sub-category of economic forecasts, perhaps. But not about more general things, like presidential elections. > Imagine a strategy that has a 50% chance of blowing you up completely over 10 years, but nets you 50% more profit if it works. The average return of this strategy is 25% less than a safe strategy (zero risk, zero gain), but it has a 50% chance of winning in this marketplace. If it were real money, nobody would go near it. People go near real money strategies like that all the time. That's all WallStreetBets is, or the financial crisis, for that matter. I do take your point that this behavior may be more pronounced in a community like this, but I don't think it invalidates the model.
      - bananaface 6y ago
        >This isn't trading, though. It's forecasting. That's not my point. The point is people don't give away predictive edges for internet points (or reputation). There are many reasons why but the lack of a betting & trading StackOverflow is one symptom. It's just an example, but TBH it's not that relevant since this market wouldn't involve revealing edges. >People go near real money strategies like that all the time. Absolutely, and it's a problem with real funds. But: - It's a lot rarer. - There's a much stronger incentive for other people to quietly take the opposite sides of those bets, which normalises the market. We'll see what effect it has, but I think this marketplace will just end up following the values on PredictIt.
- anonytrary 6y ago
  Define profit. Points can be socialized, providing a source of status. Status is profit. Money, fame, and love -- common things we chase.
- AznHisoka 6y ago
  I agree. My eyes popped when I saw the headline as I was eager to participate. When I saw it didn’t involve real money I didn’t bother to read further.
tantalor 6y ago
What is "SKITG"?
- pbronez 6y ago
  Probably “SKin In The Game”
- deleted 6y ago
  [deleted]
OzzyB 6y ago
You right, just like here, on HN, with this comment that I'm writing you all right now, hoping that it won't get downvoted, or that I won't get laughed at, because I'm smart dammit, and I have 1300 points that I don't want to lose.
- blackSparrow 6y ago
  But then there's so many others like me who don't give a damn about these points, mostly because they mean very less in this community. Yes, you could collect more points by writing smarter factual stuff but the same can also be done by writing stuff that appeals to a certain section of the people and these people have the loudest voices (mostly active on the site). I'm new to HN though and I'm curious if someone can change my mind.
danielscrubs 6y ago
People do vastly different things when money is involved. For example, using 50 points to get another emoji in a chat app is ok, but over my dead body that I will pay a single cent to get it. I’ve even seen that getting people to bet with real money and they will be exponentially more careful, diligent and down to earth even if it’s just lunch money.
- chillacy 6y ago
  For that you’d also have to be betting serious amounts of money. Take a trip to Vegas or options trading forums and you’ll see some people get very serious while others trade “for fun”

by darawk 6y ago

bananaface 6y ago

I'm not convinced. If there's no direct profit, I can't imagine talented people are going to waste that much time on it. Reputation is also not that great of a proxy, since you can game it. E.g. by using strategies that push all the risk into the tails. If it's money, you have a much stronger incentive to cover your ass against rare but disastrous blowups, since your entire livelihood is at stake (rather than just your ability to play the local game). If you're just trying to look good on Facebook... The risk/reward is different.

darawk 6y ago
> I'm not convinced. If there's no direct profit, I can't imagine talented people are going to waste that much time on it. Wikipedia, reddit, HN, and stackoverflow would beg to differ. Reputation drives people to expend incredible amounts of effort. In 2002 I would have had the same intuition you do. But i've seen reputation systems and social credit build too many incredible things to feel that way anymore. > Reputation is also not that great of a proxy, it encourages strategies which push the risks into the tails. If it's money, you have a much stronger incentive to reduce your own tail risk since your entire livelihood is at stake, rather than just your ability to play the local game. I do think there's a reasonable argument that the risk curves will be different, but I don't really see how that cashes out in an inaccurate overall system. It seems to me that as long as reputation gets allocated to those who are consistently correct, the system should work pretty well.
- bananaface 6y ago
  There is no StackOverflow for trading, or betting. Nobody gives away their edge for free, although they may give away their trades. >I don't really see how that cashes out in an inaccurate overall system Imagine a strategy that has a 50% chance of blowing you up completely over 10 years, but nets you 50% more profit if it works. The average return of this strategy is 25% less than a safe strategy (zero risk, zero gain), but it has a 50% chance of winning in this marketplace. If it were real money, nobody would go near it. Ok, now imagine there's 100 people running strategies with that profile and 100 running the safe strategy. All of the top spots will be held by the suicidal strategy. This is an artificial example but you get the point. Real money forces you to avoid that risk profile as soon as you identify it.
  - crazygringo 6y ago
    This is exactly it. I'm surprised I had to scroll down this far to find the actual explanation.
  - darawk 6y ago
    > There is no StackOverflow for trading, or betting. Nobody gives away their edge for free, although they may give away their trades. This isn't trading, though. It's forecasting. You could make that argument about the sub-category of economic forecasts, perhaps. But not about more general things, like presidential elections. > Imagine a strategy that has a 50% chance of blowing you up completely over 10 years, but nets you 50% more profit if it works. The average return of this strategy is 25% less than a safe strategy (zero risk, zero gain), but it has a 50% chance of winning in this marketplace. If it were real money, nobody would go near it. People go near real money strategies like that all the time. That's all WallStreetBets is, or the financial crisis, for that matter. I do take your point that this behavior may be more pronounced in a community like this, but I don't think it invalidates the model.
    - bananaface 6y ago
      >This isn't trading, though. It's forecasting. That's not my point. The point is people don't give away predictive edges for internet points (or reputation). There are many reasons why but the lack of a betting & trading StackOverflow is one symptom. It's just an example, but TBH it's not that relevant since this market wouldn't involve revealing edges. >People go near real money strategies like that all the time. Absolutely, and it's a problem with real funds. But: - It's a lot rarer. - There's a much stronger incentive for other people to quietly take the opposite sides of those bets, which normalises the market. We'll see what effect it has, but I think this marketplace will just end up following the values on PredictIt.
anonytrary 6y ago
Define profit. Points can be socialized, providing a source of status. Status is profit. Money, fame, and love -- common things we chase.
AznHisoka 6y ago
I agree. My eyes popped when I saw the headline as I was eager to participate. When I saw it didn’t involve real money I didn’t bother to read further.

tantalor 6y ago

What is "SKITG"?

pbronez 6y ago
Probably “SKin In The Game”
deleted 6y ago
[deleted]

OzzyB 6y ago

You right, just like here, on HN, with this comment that I'm writing you all right now, hoping that it won't get downvoted, or that I won't get laughed at, because I'm smart dammit, and I have 1300 points that I don't want to lose.

blackSparrow 6y ago
But then there's so many others like me who don't give a damn about these points, mostly because they mean very less in this community. Yes, you could collect more points by writing smarter factual stuff but the same can also be done by writing stuff that appeals to a certain section of the people and these people have the loudest voices (mostly active on the site). I'm new to HN though and I'm curious if someone can change my mind.

danielscrubs 6y ago

People do vastly different things when money is involved. For example, using 50 points to get another emoji in a chat app is ok, but over my dead body that I will pay a single cent to get it. I’ve even seen that getting people to bet with real money and they will be exponentially more careful, diligent and down to earth even if it’s just lunch money.

chillacy 6y ago
For that you’d also have to be betting serious amounts of money. Take a trip to Vegas or options trading forums and you’ll see some people get very serious while others trade “for fun”